IDC spending guide shows AI spending will double by 2025

According to a new IDC spending guide, U.S. spending on artificial intelligence solutions will double by 2025.

Spending on AI in the United States will grow to $120 billion by 2025, representing a compound annual growth rate (CAGR) of 26.0% over the 2021-2025 forecast period. All 19 U.S. industries profiled in the latest 'Worldwide Artificial Intelligence Spending Guide' from the International Data Corporation (IDC) are forecast to deliver AI spending growth of 20% or more. The U.S. accounts for more than half of all AI spending worldwide.

Throughout the forecast period, retail will remain the largest U.S. industry for AI spending, while banking will be the second-largest industry. These two industries will represent nearly 28% of all AI spending in the United States in 2025 and will account for almost $20 billion of the amount added to the U.S. total over the forecast. The spending guide shows that the industries that will see the fastest growth in AI spending will be professional services, media, securities, and investment services, all with CAGRs greater than 30%.

In retail, the AI use cases that will receive the most investment will be augmented customer service agents, and expert shopping advisors - product recommendations. These two use cases account for nearly 40% of AI spending in the industry. IDC says the shift to online shopping contributes considerably to adopting AI within retail.

AI spending in the banking industry will be spread across several functional areas, including customer service (program advisors and recommendation systems), operations (fraud analysis and investigation), and security (augmented threat intelligence and prevention systems).

Regarding total spending throughout the forecast, two of the 30 AI use cases included in the spending guide will remain the largest, augmented customer service agents and sales process recommendation and augmentation. These two use cases will account for more than 20% of all AI spending in 2025.

In terms of growth, two AI use cases (public safety and emergency response and augmented claims processing) will have five-year CAGRs greater than 30%, while a third use case (IT optimisation) will ride a CAGR of 29.7% to become the third-largest AI use case in 2025.

"The greatest potential benefit for the use of AI remains its use in developing new business and building new business models," says IDC senior research manager, Customer Insights - Analysis, Mike Glennon.

"However, existing businesses are hesitant to embrace this potential, leaving the greatest opportunities to new market entrants with no fear of change and can adapt easily to new ways of conducting business."

He says the future for business is AI, and those companies that can seize this opportunity could quickly become the new giants."

The Worldwide Artificial Intelligence Spending Guide sizes spending for technologies that analyse, organise, access, and provide advisory services based on a range of unstructured information. The spending guide quantifies the AI opportunity by providing data for 30 use cases across 19 industries in nine regions and 32 countries. Data is also available for the related hardware, software, and services categories.